Tanjung Priok Clashes Bad for Image, Business of Indonesia's Ports

Jakarta Globe, April 16, 2010

Wednesday’s rioting and bloodshed at Tanjung Priok, sparked by an apparent misunderstanding over the fate of the historic tomb of an 18th-century religious leader, highlights the volatile fault lines of religion and poverty that have given the country a reputation for instability and incipient chaos.

The televised mayhem in Jakarta’s main port area left government officials and business leaders scrambling to explain what happened, while acknowledging that the area itself is fraught with the potential for further unrest. While the immediate economic impact is limited, the melee added to the port’s already dodgy reputation among international insurers.

Coordinating Minister for the Economy Hatta Rajasa said on Wednesday that he hoped the clashes, which claimed the lives of three public order officers and injured more than a hundred, would have no negative repercussions for the economy, according to the Antara news agency. “I hope there will be a settlement soon,” Hatta said.

Noting that Tanjung Priok’s Koja Container Terminal is the main gateway for goods in and out of the country, Hatta urged negotiations to ease the tensions in the neighborhood over the tomb and clarify the intentions — still unclear — that the North Jakarta government has for it.

In another report, however, the National Maritime Institute (Namarin) responded to the violence by raising the risk assessment for doing business in Tanjung Priok Port, a move likely to raise shipping insurance costs, according to Antara.

“The violent clash in Koja [North Jakarta] on Wednesday ... raised the level even higher. In the long run, [Tanjung] Priok Port’s international reputation as an export and import gate will plummet,” Namarin director Siswanto Rusdi said in Jakarta on Thursday, Antara reported.

Siswanto said that in a meeting last November, the Joint War Committee, a London organization that analyzes shipping risks, had listed maritime regions in Indonesia as “war risk zones” that might pose dangers to domestic or international ships.

Siswanto said Tanjung Priok Port had a number of potentially volatile issues, including a land dispute over the Koja Container Terminal that involves hundreds of families.

“The potential is there” for more trouble and social conflict, he said. “The rule of law is uncertain in [Tanjung] Priok.”

Johnson W Sutjipto, chairman of the Indonesian National Shipowners Association (INSA), said the fighting only halted port operations for a few hours and he hoped there would no lasting fallout. “There was not much of a delay because the Transportation Ministry took immediate steps to respond,” Johnson told the Jakarta Globe.

He said the case would affect a government plan to ask the JWC to cancel its risk alert for Indonesian ports, including Tanjung Priok.

Johnson said ports in Belawan, Balikpapan and Natuna were also categorized as risky because of the potential for social unrest.

Wednesday’s clashes will automatically postpone plans to propose dropping the risk level for all the nation’s ports. As a result of the JWC assessment, Johnson said, shipowners faced higher insurance rates.

Namarin’s Siswanto told Antara that a number of studies had concluded over the years that Tanjung Priok was unfit as a port largely because of the social tensions and complex landholding issues. “The problem is, the government and PT Pelindo II [the port operator] insist on developing Tanjung Priok, leading to efforts to expand the area and acquire more land, which raises the potential of precipitating social conflict.”

Siswanto predicted that as Tanjung Priok’s competitiveness decreased, potential investors would be reluctant to transport their goods through the port.

“I heard indications that foreign investors in TPK [the Koja Container Terminal], like Hutchison Whampoa, have taken steps to leave Tanjung Priok,” he said.

The immediate problem, said Purbaya Yudhi Sadewa, chief researcher at the state-run Danareksa Research Institute, is for the government to calm the community.

“If the government continues with repressive actions, it will send a bad signal. Authorities opted for mediation, which is wise,” Purbaya said.

The stock market did not fall after the fighting, Purbaya noted. “Investors think this is only a local incident. This is not something like what is happening in Thailand.” 

JG, Antara